Which of the following problem was faced by the Indian economy at the beginning of the decade of nineties?
I. Indian economy was facing a strong inflationary pressure.
II. The economy was experiencing shortages of finance for industrialisation etc.
Show answer & explanation
Correct answer: C
Explanation
Correct Answer:
Option 3: Both I and II
Explanation:
In the early 1990s, the Indian economy was passing through a severe crisis. At that time, there was high inflation, and a shortage of adequate finance for industrialization. Foreign exchange reserves had depleted significantly and were sufficient to cover imports for only a few days. It was due to this crisis that economic reforms (LPG) were implemented in 1991.
Potential Questions for Upcoming Exams:
Question: What do the 1991 reforms relate to?
Answer: LPG
Question: What does LPG stand for?
Answer: Liberalization, Privatization, Globalization
Question: Who was the Finance Minister in 1991?
Answer: Manmohan Singh
Question: What is the Balance of Payments?
Answer: The balance between imports and exports